Green Bonds

Overview

At Hannon Armstrong, we are committed to ensuring all debt we issue is dedicated to eligible green projects. Typically, for corporate unsecured debt, we pursue independent verification. Since 2013, we have raised approximately $5.3 billion of green debt, including securitizations and non-recourse and corporate issuances. Hannon Armstrong is a proud member of the Nasdaq Sustainable Bond Network.

Green Debt Issuances

Sustainable Yield Bonds

Off Balance Sheet

Securitizations typically of public
sector receivables and managed off
balance sheet

Sustainable Yield Bond

On Balance Sheet

Non-recourse, asset-backed debt
managed on balance sheet

Corporate Green Bonds

Senior unsecured or convertible bonds
issued as corporate obligations

Hannon Armstrong - green bonds pie chart image

1) From 2013 IPO through 8/31/20

2) ICMA’s Green Bond Principles applicable to corporate unsecured green bonds and convertible green bonds due 2023 but not necessarily to convertible green bonds due 2022

Green Bond Framework

In alignment with ICMA’s Green Bond Principles (2018)³

“Eligible Green Projects” means projects intended to reduce carbon emissions or provide other environmental benefits in the following categories:

Behind-The-Meter (“BTM”): Distributed building or facility projects that reduce energy usage or cost through the use of solar generation and energy storage or energy-efficient improvements, including heating, ventilation, and air conditioning systems (“HVAC”), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems;

Grid Connected (“GC”): Projects that deploy cleaner energy sources, such as solar and wind to generate power where the off-taker or counterparty is part of the wholesale electric power grid; and

Sustainable Infrastructure: Upgraded transmission or distribution systems, water, and stormwater infrastructure, seismic retrofits, and other projects, that improve water or energy efficiency, increase resiliency, positively impact the environment, or more efficiently use natural resources.

As part of our investment process, we intend to calculate the ratio of the estimated first year of metric tons of carbon emissions avoided (or that will be avoided) by the investment divided by the capital to be invested to understand the impact the investment is expected to have on climate change.

We intend to utilize the net proceeds of this offering to acquire or refinance, in whole or in part, Eligible Green Projects. Eligible Green Projects may include projects with disbursements made during the twelve months preceding the issue date of the Notes and projects with disbursements to be made following the issue date. Prior to the full investment of such net proceeds, we intend to invest such net proceeds in interest-bearing accounts and short-term, interest-bearing securities which are consistent with our intention to qualify for taxation as a REIT.

During the term of the Notes, until such time as the net proceeds from this offering have been fully allocated to Eligible Green Projects, we will publish annual updates on our website detailing, at a minimum, the allocation of the net proceeds from this offering to specific Eligible Green Projects along with the associated CarbonCount®.

3) ICMA’s Green Bond Principles applicable to corporate unsecured green bonds and convertible green bonds due 2023 but not necessarily to convertible green bonds due 2022

Corporate Green Bonds⁴

SECURITY NAME	INDEPENDENT VERIFIER	CUSIP	MATURITY DATE	ISSUED VOLUME	COUPON RATE	CONVERSION PREMIUM	BOND TYPE	RATINGS	CarbonCount^®5
HASI-GRB-001	Ernst and Young	418751 AA1	7/15/2024	$500,000,000	5.25%	N/A	Senior Unsecured	S&P: BB+ Fitch: BB+	0.25
HASI-GRB-002	Ernst and Young	418751 AB9	4/15/2025	$400,000,000	6.00%	N/A	Senior Unsecured	S&P: BB+ Fitch: BB+	2.01
HASI-GRB-003	Ernst and Young	418751 AD5	9/15/2030	$375,000,000	3.75%	N/A	Senior Unsecured	S&P: BB+ Fitch: BB+	0.35
HASI-GRB-004	Ernst and Young	41068X AD2	8/15/2023	$143,750,000	0.00%	27.5%	Convertible Senior Unsecured	S&P: BB+ Fitch: BB+	0.29

4) Excludes convertible green bonds due 2022

5) This is the CarbonCount® metric resulting from the allocation of the net proceeds from this offering to specific Eligible Green Projects. CarbonCount® is the ratio of the estimated first year of metric tons of carbon emissions avoided (or that will be avoided) by the investment divided by the capital to be invested to understand the impact the investment is expected to have on climate change. In this calculation, we use emissions factor data, expressed on a CO2 equivalent basis, from the U.S. Government or the International Energy Administration to estimate a project’s energy production or savings to compute an estimate of metric tons of carbon emissions that will be avoided. In addition to carbon, we also consider other environmental attributes, such as water use reduction, stormwater remediation benefits, or stream restoration benefits.